@PearVC, a #venture firm that closed its largest fund recently: signed a deal to sublease

@PearVC, a #venture firm that closed its largest fund recently: signed a deal to sublease 30,000 square feet of Class A office space in #SanFrancisco's Mission Bay neighborhood from @Dropbox. This move is part of a growing trend of companies taking up more space in San Francisco as an earlier generation of companies shrinks its physical footprint. @OpenAI subleased two buildings totaling 486,600 square feet from @Uber, which originally leased a grouping of four buildings down the street from Dropbox and will continue to occupy two of these.

@Anthropic, a rival to OpenAI, also recently closed a sizable subleasing deal, planning to take over the entire 250,000-square-foot building in downtown San Francisco that was previously @Slack's headquarters. Salesforce, which acquired Slack in 2021, is an investor in Anthropic. Pear VC co-founder Pejman Nozad wrote one of the first small checks to Dropbox when he was still relatively new to the U.S. from Iran and selling Persian rugs to Silicon Valley bigwigs.

It's a good time to strike a subleasing deal if you're a well-funded company on the rise. According to @ColinYasukochi, an executive director at the commercial #realestate services firm @CBRE, subleases in prime areas like Mission Bay and the city's Financial District currently range from $60 to $80 per square foot. For startups willing to sublease space with less than five years left on the lessee's contract, the better the terms (as they'll need to lease again somewhere else in the not-too-distant future).

#SanFrancisco's commercial buildings are currently 35% vacant, and there are still more tenants flowing out the door than entering them. However, a tipping point is seemingly in sight. In the third quarter of this year, there was "negative net absorption" of 1.85 million square feet in San Francisco, while market demand reached 5.2 million square feet, the highest increase since the first quarter of 2020. Tech outfits are enticed by the opportunity to rent sleeker space for the same or better prices than was possible several years ago, and in more central areas of the city.

Yasukochi anticipates that if the economy improves in the second half of the new year and interest rates come down, tech outfits in particular will be positioned to recover faster and pull the city along with them. However, he does not think those tech companies will necessarily be growing in San Francisco's Hayes Valley, which has led a resurgence of interest in the city due to its concentration of #AI communities.